“Work Made For Hire” Clause Can Turn an Independent Contractor Into an Employee

Did you know there are provisions in California law that say “work made for hire” language in a contract with an independent contractor (a person, not an LLC or corp) can lead to their treatment as an employee for workers comp and unemployment insurance purposes? Check them out:

• California Labor Code 3351.5
• California Unemployment Insurance Code 686

“Work made for hire” is a well-known concept in copyright law (see 17 U.S.C. 101); it generally gives ownership/copyright protection to a person other than the one who actually created the work.  For example, an employer will own works created by employees during the course and scope of their employment.   It’s common to see “work made for hire” clauses in agreements where an independent contractor creates intellectual property, like graphics and software, for a third party.

Consider the penalties that could be imposed by the State of California for not having the appropriate insurance.  After a very quick look I couldn’t find any published cases, but you may want to revise your contracts with “assignment” language instead, at least in CA.